Replication package for “Competition and Debt Conservatism”

This document describes the replication package for the JFQA paper titled “Competition and Debt Conservatism” by Seth Armitage and Woon Sau Leung.

Please note the code was written using Stata/SE 18.0 and it might not work properly in older versions of Stata. 


Notes about datasets:
For complete replication, researchers need to have access to:
(1) CRSP/Compustat Merged (Annual and Quarterly Fundamentals + Monthly Stock Prices) 
(2) Compustat Global (Annual and Quarterly + Monthly Stock Prices)
(3) SDC Platinum
(4) FactSet Lionshares

Further notes about data sources:
(1) The competition law index (CLI), compiled by Professors Anu Bradford and Adam S. Chilton (2018), can be downloaded (along with documentation) from: www.comparativecompetition
law.org.
(2) Exchange rates converting local currency to U.S. dollars can be downloaded from Thomson Reuters or the Bank of England (whichever is available) via Refinitiv (DataStream).
(3) Country macroeconomic variables are downloaded from World Bank (https://databank.worldbank.org/source/world-development-indicators). 
(4) The shareholder rights index is collected from Djankov, La Porta, Lopez-de-Silanes, and Shleifer (2008) (https://faculty.tuck.dartmouth.edu/rafael-laporta/research-publications)


Instructions:

The file named "CompetitionZL_full_code.do" contains all codes that we used to (1) open and clean each dataset, (2) merge all datasets onto the global firms, (3) apply exclusion criteria and winsorize, (4) and perform all empirical analysis. Each section is bookmarked for easier navigation. Each section contains a brief description (in comments) to explain the logic and sequence of the data procedures.


Note about the pseudo data for our final sample:

The final sample (FinalSamplePseudo.dta) data cannot be shared publicly due to licensing restrictions. Hence, for the final sample used for our analysis, we prepared a randomized version of it for the analysis code to execute. As the pseudo sample datasets are a considerably smaller pseudo (randomized) sample and are not the actual sample used in the paper, the estimation results from the pseudo samples will not be the same as those reported in the paper. In the pseudo sample, we use "pseudo_id" to replace the actual firm identifiers (gvkey2). 

To reproduce the results of these tables and figures in the paper, please follow closely the data collection procedure and data sources outlined in Section II.A of the paper to construct the full sample.

